Zacks Investment Research downgraded
) to a Zacks Rank #5 (Strong Sell) on February 6, 2013.
Why the Downgrade?
After the release of its financial results for the third quarter
of fiscal 2013 (ended Dec 31, 2012) on Feb 1, 2013, earnings
estimates for this metal fabrication company witnessed downward
revisions. The Zacks Consensus Estimate for fiscal 2013 went down
by 5.1% to 94 cents while that for 2014 decreased by 5.4% to
$1.23 per share in the last 7 days.
Earnings per share, adjusted for one-time items, in the quarter
came in at 21 cents, roughly 22.2% below the Zacks Consensus
Estimate of 27 cents. On a year-over-year basis, earnings were an
improvement over 16 cents earned in the year-ago quarter.
Revenue increased 5% on the back of healthy growth of 37% in
international sales recorded in the quarter. Sales in the U.S.
market were weak and down 18.0% year over year, due primarily to
project delays associated with the naval nuclear propulsion
program. Orders in the quarter were down 4% sequentially while
gross margin was pulled down by 270 basis points.
For fiscal 2013, management revised down its revenue expectation
from the $105-$115 million range to the range of $102.5-$107.5
million. SG&A is now expected to be 16.5%-17% of revenue as
against 16%-17% expected earlier.
Negative earnings surprise in three out of four trailing quarters
with the average being -0.7%, raises skepticism over the
financial health of the company. For fiscal 2013 and 2014, we
have an Earnings ESP (Read: Zacks Earnings ESP: A Better Method)
of -2.1% and -0.8%, respectively.
Other Stocks to Consider
Other stocks to watch out for in the industry are
Altra Holdings, Inc.
Atlas Copco AB
), each holding a Zacks Rank #1 (Strong Buy).
ALTRA HOLDINGS (AIMC): Free Stock Analysis
(ATLKY): ETF Research Reports
GRAHAM CORP (GHM): Free Stock Analysis Report
METSO CORP -ADR (MXCYY): Free Stock Analysis
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